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Knowledge-based Hierarchies: Using Organizations to Understand the Economy

Author

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  • Luis Garicano
  • Esteban Rossi-Hansberg
Abstract
We argue that incorporating the decision of how to organize the acquisition, use, and communication of knowledge into economic models is essential to understand a wide variety of economic phenomena. We survey the literature that has used knowledge-based hierarchies to study issues like the evolution of wage inequality, the growth and productivity of firms, economic development, the gains from international trade, as well as offshoring and the formation of international production teams, among many others. We also review the nascent empirical literature that has, so far, confirmed the importance of organizational decisions and many of its more salient implications.

Suggested Citation

  • Luis Garicano & Esteban Rossi-Hansberg, 2014. "Knowledge-based Hierarchies: Using Organizations to Understand the Economy," NBER Working Papers 20607, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:20607
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    References listed on IDEAS

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    2. Nicholas Bloom & Luis Garicano & Raffaella Sadun & John Van Reenen, 2014. "The Distinct Effects of Information Technology and Communication Technology on Firm Organization," Management Science, INFORMS, vol. 60(12), pages 2859-2885, December.
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    More about this item

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • F6 - International Economics - - Economic Impacts of Globalization
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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